A bullish engulfing pattern forms when a red (down) candle is immediately followed by a green (up) candle whose body fully covers — engulfs — the body of the prior red candle. It shows buyers didn't just stop the decline, they overpowered it decisively within a single session.
Why it matters
- —One of the more reliable two-candle reversal signals, particularly when it forms at a known support level.
- —The larger the green candle relative to the red one it engulfs, the more decisive the signal.
- —Confirmation from above-average volume on the green candle strengthens the case for a genuine reversal.
How to read it
| At support, after a downtrend | Strong bullish reversal signal |
| Mid-range | Weaker, lower-conviction signal |
| On high volume | Higher-confidence reversal |